PHA Q&A With Ennova Health
Ennova Health is taking a different approach to the healthcare supply chain by directing hospitals directly to the manufacturers and suppliers.
PHA recently sat down with the Ennova team to learn more about its supply chain concept.
PHA: What deficit in the market has Ennova identified?
Steve Carbonara: Having spent the past two decades working in healthcare, I’ve witnessed so many issues with the supplies and medical products being distributed to smaller provider organizations. These physicians aren’t able to buy the supplies they need without going through several layers of sales and marketing costs.
For example, the typical product is priced anywhere from 10 percent to 60 percent higher (and sometimes even by as much as 200 percent) than if it came directly from the manufacturer.
Physician-owned hospitals (POHs) with revenues of $100M to $500M and a supply spend of $20M to $100M a year are struggling to sustain their practices on just 5 percent to 10 percent in profitability. Ennova Health is changing the game by helping POHs reclaim 15 percent to 40 percent of their supply spend capital.
PHA: What solution has Ennova found?
Philip L’Esperance: Our team has proven that we can reduce a hospital’s biologics spending by an average of 28 percent. The average surgical hospital we evaluated spent $2M to $8M per year in this category, which means we can reclaim millions in capital and drive profitability for any hospital.
Ennova’s approach also removes all non-objective sales and marketing claims so that the buyer can compare products in full transparency, this is our secret sauce for providing clinical equivalency between products.
PHA: How is Ennova able to secure these savings and provide these solutions to its clients?
Steve Carbonara: First and foremost, there is no middleman wielding any power in the Ennova Health Marketplace model. Rather than acting as a distributor, our team works directly with manufacturers to build the appropriate supply chain relationship, which allows manufacturers to join our network while also putting the power back into the hospital and physicians’ hands.
Part of this involves analyzing and understanding each care provider’s purchasing patterns over time so that we can ensure the supplies they require will be available when they need them. Not only does this save POH’s time (no more searching for savings opportunities), it also allows them to build their own unique supply chain within the marketplace.
While we pass all savings onto the hospital, we may also provide the manufacturer with additional profitability; in this fashion, the two main parties reap the full benefit of their transaction. Ennova Health only provides the platform, building the data relationships to show clinical equivalency and handle the transaction once the buying hospital decides which manufacturer it wants to purchase from.
PHA: Why did you start Ennova?
Steve Carbonara: I have worked in healthcare IT for more than 20 years, watching physicians adopt EHRs, and other technologies, that always promised efficiency but only delivered additional cost and heartache. I am fortunate to have great relationships with many of the physicians I’ve met throughout my career in healthcare, and I wanted to help solve the supply chain problems, so many of them struggle with. My goal in building Ennova has always been to work directly with the physicians to build a software solution that puts them and their patients first; a solution that could deliver what others haven’t (simple to use, time savings, cost savings, and total transparency into the entire distribution process).
Duane Tursi: One of the most compelling elements of the problem Ennova solves over time is transparency about supply information (metadata). It is apparent that in an effort to protect their franchises, current suppliers obscure information about their products making it very difficult for care providers to compare the products they use against alternative offerings. It is obvious this is an intentional, seemingly monopolistic practice, in an effort to lock customers into their ecosystem. Ennova’s supply data standardization provides consistent information about all products in the marketplace, giving visibility to alternatives and facilitating an open market to emerge in an industry that is captive to a few, very large, extremely profitable suppliers.
Philip L’Esperance: I spent a number of years in the 2010 timeframe building out a spine implant company for an investor with the central thesis around providing “made in the USA” implants at humane prices by:
- Selecting products that required minimal operating room representation.
- Designing and manufacturing our own products.
- Selling the products directly to the hospital users.
This process eliminated many of the traditional layers of cost. At that time, the challenge was selling singular products to large health systems that did not have the appetite for managing more vendors. Ennova Health was founded on many of the same principles and some very key differences, such as focusing on POH’s that are interested in a direct-to-manufacture model with the support of world-class user experience to help guide the transactions. Let’s just say I have a little unfinished business in this space!
PHA: You recently partnered with one of our PHA health facilities; can you tell us what that looked like and when they started to see savings?
Kelly Scrantz: We started Ennova Health because of the work we had previously done with a PHA member. This particular hospital had more than $4M spend in biologics annually, and we helped the facility reduce this number by 31% ($1M+). It was this specific case that validated our business model of developing product taxonomies for each product category to demonstrate clinical equivalence for comparison and replacement. We then built that one product category out to all products so that we could help serve the entire hospital spend. A more recent example was our evaluation of the spinal implant category, in which we are helping a facility reduce its spending by more than 40%, which will save the hospital just under $2M per year (case-load dependent? Or is that presuming 100% conversion?).
PHA: What does a partnership with Ennova Health look like? Walk us through the process.
Steve Carbonara: Ennova Health is currently waiving all membership fees through Spring 2023 for any PHA member. This enables you to sign up with zero cost or obligation and provides an opportunity to really see what options exist in the market right now.
We start with an informative 20-minute discovery call to learn more about your facility’s specific needs, and we work with you (or a dedicated member of your team) to review your current supply spend. We can review and evaluate your current supply spend in a number of ways, including an onsite workshop or simply as a data share and review.
Once we have the information, we need to understand your unique situation and needs, we create a customized report that provides you with feedback on where you can reduce costs and improve profitability. Our team works alongside yours every step of the way to continually evaluate new replacement options for all product categories.
PHA: What level of savings can a PHA member expect when they leverage the Ennova Health Marketplace?
Steve Carbonara: Generally, Ennova Health customers can expect:
- 5 percent to 15 percent on general supplies and PPE.
- 20 percent to 35 percent on biologics.
- 30 percent to 40 percent on surgical implants.
PHA: We’ve talked about cost savings. What are some other benefits of working with Ennova Health?
Duane Tursi: There are many benefits that go beyond cost savings, including:
- No contractual commitments.
- Regain control over procurement.
- Visibility into the supply chain.
- No minimum purchase volumes.
- No rebate program management.
- Complete choice of products.
PHA: How do PHA members get started?
Steve Carbonara: Getting started is easy. It begins with the 20-minute discovery call to learn more about your current supply spend and your unique supply needs.
Philip L’Esperance: Typically, we ask our doctors to share two years of procurement data so that we have enough information to analyze and deliver a profit opportunity report. However, we can review and evaluate your current supply spend in a number of ways, including an onsite workshop.
We work directly with you (and for you!) to help you cut costs in your supply spend, and we continually evaluate the marketplace to ensure you’re getting the highest value and savings.